Car market has foot on the brake

Towards the beginning of the year, officials at Porsche Romania, the importer of Audi, Volkswagen, Skoda, Seat and Porsche, estimated sales would go up by at least 10 percent against 2007 and set a sales target of 65,000 units. Other car firms expressed similar expectations.
At mid-year these targets now seem a bit too optimistic, considering the market increase after six months of some 3.6 percent. According to Brent Valmar, Porsche Romania's GM, the market trend in the first half of the year can be attributed to the introduction of the new environment tax, with a lower value for second hand cars and the exchange rate fluctuations.
One ray of light was the government program helping drivers trade their old vehicles for new ones. Overall, though, total sales of Dacia and the top ten car brands imported, which represent 75 percent of the total market, registered in the first half of the year a decrease of 1.6 percent to 137,000 cars.

Asian cars move up a gear
Car brands such as Kia, Mazda and Toyota continue to gain market share while other brands just struggle for survival. Mazda even plans to boost sales on the local market by increasing its number of dealerships from three to 12. In 2007, the firm sold 1,000 cars locally, 170 percent up on 2006, and is aiming to sell 2,000 this year. Brands such as Toyota have reported even more spectacular rises.
Toyota Romania sold last year 10,458 Toyota and Lexus units, 70 percent more than the previous year. “We plan to continue the record series this year as well. Our target for this year is set at 14,000 Toyota and Lexus cars to be sold by the end of the year,” said Mihai Bordeanu, commercial manager at Toyota Romania.
Kia has also speeded up and reported significant sales on the local market, when a while ago the brand was not a famous one locally.
But despite this positive trend there is one aspect that the automotive industry is lacking: after-sales services and service centers. Drivers forced to wait days just to schedule an appointment to bring their car in for service, expensive inspection fees, costly spare parts and a poorly qualified workforce offering little in the way of customer relations are just a few of the problems in this field.
Specialists estimate that this is the future of the local market: players will have to focus more on services than car sales.

Expansion plans
Top car importers on the local market have announced millions of euros in investment plans in showrooms and service units, all over the country.
Citroen Romania plans to invest EUR 8 million to expand its dealer network by another five units by June 2009. Recently Midocar invested some EUR 12 million in a new integrated showroom complex, where most of the sum invested was spent on the service segment. Meanwhile, BDT Cars has plans to build an integrated complex for the Mazda brand in Bucharest next year, involving a total investment of some EUR 3 million.
Due to the impressive sales increase registered by this brand, the expansion plans for Mazda do not stop here. “Mazda's target is to have 20 operational showrooms by the end of the year. We plan to open new sales and service points in Galati, Brasov, Bacau, Ploiesti and Craiova. Presently, we are in discussions and negotiations with companies from northern Romania regarding collaborations both on the sales and service sides,” said Cristian Rigu, country manager of Mazda.
Toyota Romania officials plan to reach 30 service units by 2010, from 18 at present. According to them, the investment in each location could be between EUR 1 million and EUR 10 million. Romcar also has strategic plans to expand its dealer network, from 30 showrooms and 30 service centers as it stands now. Company representatives said that they would invest EUR 30 million in 14 new showrooms and service units, in Bucharest, Targoviste, Caransebes, Deva, Slatina, Bistrita and Oradea.
Recently, Ford Europe announced it planned to launch a National Sales Company in Romania, from August 2010, which will assume the whole responsibility of the marketing, sales and service department of Ford brand.
Meanwhile, exclusive brands such as BMW are also taking measures to expand. Automobile Bavaria Group recently opened a new center in Cluj, where the total investment reached EUR 4 million. The new facility occupies 11,500 sqm and has a service unit that can repair 11 cars simultaneously.

By Dana Ciuraru

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